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Credit Information Reforms

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Credit Information Reforms

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Credit Information Reforms Implemented Between 2016 – 2018: 

Depth of credit information reformsDescriptionImpactStatus / Suggested Next Steps
1Speedy passage of the Credit Reporting Act (Legislative reform)The Act provides for the framework for credit reporting, licencing and regulations of credit bureaux and other related matters.A new vista of credit providers / institutions is now, by law, to be submitting credit information to Credit Bureaus and to obtain credit report about a Data Subject before granting credit.The law extends beyond the banking institutions under the purview of the CBN to other institutions operating as pharmaceuticals, auto dealers, legal firms, insurance companies, oil and gas, leasing, conglomerates, couriers, discos and telcos. • Credit reports are now a value-added service for all concerned • Borrowers now have the right of law to access their credit report• To enable lenders make instant credit decisions• Borrower can borrow on score as a substitute for collateral.Continued awareness of Credit reporting and credit reporting products amongst all stakeholders 
2Encourage credit scoring as a value-added service in Credit BureausNew SME-financing ProductCredit Scoring to encourage reputational collateral rather than over reliance on physical collateral.

Legal Rights in Movable Transactions Reforms Implemented Between 2016 – 2018: 

Secured transactions in movable assets  reformsDescriptionImpactStatus / Suggested Next Steps
1Creation of a National Collateral Registry (NCR) and its utilization. The operationalisation of a modern, notice-based, web-enabled National Collateral Registry (NCR), under the aegis of the Central Bank of Nigeria. A key feature of the secured transactions system. Database for all secured transactions in movable assets. Easy information on status of movable assets: allows borrowers prove their credit worthiness and lenders to assess priority interests in potential claims. Continued awareness to drive utilisation by both MSMEs and lenders. Strategic engagements with all segments of lendersTraining of non-bank financial institutionsIntegration of the registry with other registries registering movable assets such as the CAC, Vehicle Licencing Office, State Government Registries (Lagos in particular)
2Speedy Passage of the Secured Transaction in Movable Assets (AKA the Collateral Registry) Act, 2017.  An Act to provide for secured transactions, registration and regulation of security interests in movable assets; and for related matters.The existence of an integrated legal framework for secured transactions in movable property. Law recognises and encourages diversification of collaterals by SMEs from landed property to movable assets such as inventory, leases, equipment, receivables, farm products, etc.Strengthening of the secured transactions system – insolvency and bankruptcy laws/provisions through CAMA 2018. 

Recent/Ongoing Reform Initiatives: 

  1. Linking of CAC movable assets database with the NCR portal and enforcement of disaggregation of data on movable assets by companies filing charges at the CAC. (October 2018 – March 2019). 

This reform started in February 2018 and by April 2018 there was a resolution which led the CAC to announce via its website http://new.cac.gov.ng/home/public-notice-2/ that it would be collecting data on Movable Assets, so as to be able to transmit these to the NCR. However, this was not implemented by the CAC. The NCR on its part tried to create a link to the CAC but was deemed inadequate and not recognised by the World Bank.  

See Also

An integration of the CAC database with the NCR through an automated interface has now been completed (March 2019). A link to the NCR by CAC has now been created through an API (Application Programme Interface) for information on movable assets in CAC registry to be accessible through, from and by the NCR. To this effect, the CAC has begun the disaggregation of information on movable assets in charges filed by companies through the CAC. Although the CAC had notified the public via its website: http://new.cac.gov.ng/home/public-notice-2/since April 2018, this initiative was not implemented by the CAC until February, 2019.

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